Smart appliances manufacturer Atomberg has raised $86 million in a funding round led by Singapore's Temasek and private equity firm Steadview Capital, valuing the company at around $400-$450 million. The investment comes at a time when investors are looking to diversify their bets beyond traditional sectors amid a worsening funding winter.
Moneycontrol first reported the development in December, when Atomberg was in talks to raise $50-60 million from Temasek and Steadview Capital at a valuation of around $350 million, more than double what it commanded during its previous fundraise.
The round, part of Atomberg's Series C funding, also saw participation from Trifecta Capital and existing investors Jungle Ventures and Inflexor Ventures, through a combination of primary and secondary issuances, Sibabrata Das, co-founder, Atomberg told Moneycontrol in an interview.
Das added that about 50-60 percent of the $86 million raised was through the primary route, while the rest was a secondary component which saw A91 Partners reduce its stake in Atomberg by 15-20 percent. A91 Partners previously held around 49 percent in the appliances manufacturer, Tracxn data showed.
Other angel investors, such as the promoter family of Aarti Industries, the chemical manufacturers, also made a partial exit. However, Das added that all the past investors continue to be backers of Atomberg and no investor had diluted more than 40 percent of their entire holdings in the company.
“We don’t think much has changed in the market versus what it was last year, but yes investors are asking tougher questions on due diligence and the path to profitability,” Das told Moneycontrol.
Das, who did not reveal the exact valuation, added that the company was fairly content with the valuation they got. “If we had lowered our valuation expectations by 5-10 percent, we had interest from 10 investors but since our fundamentals are strong, we didn’t have to do that,” Das said.
Atomberg, which has also expanded into other consumer appliances, plans to use the funds to boost manufacturing capabilities, support new product launches, and deepen its presence in offline stores in key regions.
The company, which sees 70 percent of its total sales come from various offline channels, currently has about 200 stock-keeping units (SKUs) across smart fans, mixer grinders, and smart locks. It will also use the money to start selling kitchen chimneys and cooktops next year. In 2024, it plans to further diversify its offerings with water purifiers and water heaters.
Path to profitability
The small home appliances market is currently valued at $3.5 billion and is experiencing a compound annual growth rate (CAGR) of approximately 10 percent, as per estimates. This market comprises various established players such as Bajaj, Orient, and others, all vying for a larger share. Despite facing competition from these traditional companies, Das expressed confidence in increasing its market share from around 12 percent to about 25 percent over the next five years.
Atomberg claimed that the company grew 80-100 percent year-on-year (YoY) in the last 12 months or so. In FY22 (2021-22), Atomberg had sales of Rs 142.5 crore and a net loss of Rs 39.3 crore. While the company's sales jumped nearly 150% over FY21 (2020-21) to around Rs 358 crore, its loss remained flat at Rs 39.2 crore from the previous year.
“We’ll grow at a slightly slower pace this year but our bottom line shows significant improvement. We’ve been profitable for the past 2-3 quarters and will be profitable at a company-wide level in FY24,” Das said.
When Moneycontrol first reported about Atomberg’s fundraise in December, a person with direct knowledge of the matter had said that Atomberg does not burn a lot of money like other startups and has rather taken a more traditional approach.
Atomberg, which manufactures smart fans with features such as a smart remote control, sleep mode, voice control, and boost mode, was founded in 2012 by IIT alumni Manoj Meena and Sibabrata Das. The company has raised $45 million in funding to date, excluding the current round. Atomberg has an online presence as well as an offline distribution network of over 25,000 counters in India. The company was adding about 1,500-2,000 counters every quarter, according to Das.
In December 2021, Atomberg raised $20 million as part of its Series C funding round, led by Jungle Ventures, at a valuation of $150 million, according to Tracxn data. A91 Partners and angel investor Ramakant Sharma participated in the round.
Atomberg's fundraise comes at a time when overall capital infusion into Indian startups has dropped by around 30% from $1.9 billion in April this year to about $1.3 billion so far this month, according to Tracxn data.
The fall was despite large ticket rounds like PhonePe's $100 million round in the month, underscoring how slow the funding environment in the world's third-largest startup ecosystem has become. In fact, Tracxn data showed that on a YoY basis, the total funding had nosedived 62% from $3.4 billion in May last year to $1.3 billion this month.
Avendus Capital advised Atomberg for the fundraise.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!